So the quick take-out seems to be that BBIG/Todd are cutting their losses, and dumping the project into FMS ??
Why in a market where the price of iron ore is at historically high levels, and the demand from China at record levels, would BBIG seek to transfer their project for $1. You cannot even buy a Cheeseburger for that!
With little facts in front of us, it looks BBIG/Todd are cutting and running?
The certainty in the transaction is BBIG get $1.
The uncertainty is that any Royalty (5%) may simply never eventuate.
So BBIG has spent many, many millions$$ buying into Forge, taking over Forge, conducting endless environmental reports, endless Govt reports and studies, BFS on Port and Rail, all the engineering work on rail routes, port and of course the mine.
Then Todd spent many millions$$ on its grab for FMS, plus its loans.
How much did FMS spend, and Todd/BBIG spend on getting FMS' s/h approval?
How much has BBIG spent getting that State Rail Agreement???
The approvals and all the work completed is worth very significant value in a normal market, simply because of the time and money and political capital invested to get to this point.
So WHY are they willing to sell it for $1 and a hope of a royalty?
I can only think of one reason.
CHINA ???
Most of the Risk capital was to come from:
Chinese customers
Chinese Construction companies
Chinese Equity funders
Chinese debt funders.
Chinese shippers (probably)
Chinese equipment/infrastructure providers (rail equipment. rail lines, computer equip for rail and mine etc)
We know that much of these elements above were to be provided by Chinese Govt backed enterprises.
We know that Aust /Chinese relations are at an all-time low.
The only conclusion I can draw, is that the Chinese partners have withdrawn from the deal???
I am happy to be corrected, as I have no other information.
But it seems to me, on the surface that, whilst BBIG might be willing to transfer the infrastructure assets (ie licences/approvals etc), the BIG plus for BBIG is that they will be also transferring all the liabilities and obligations that go with the project ---> all to little FMS !
That's FMS which has net debt of $$?
What chance of raising several billion $ for equity in project??
What does FMS actually inherit?
FMS Price at posting:
$1.19 Sentiment: None Disclosure: Held
